These are high-tech dividend stocks to buy and hold. Investors should take advantage of their recent weakness in light of the Federal Reserve’s money supply tightening moves. Many of these companies will not see a dramatic downturn in their economic fortunes, at least according to analysts.
That means unless the coming recession is severe, these tech companies may be able to weather the downturn fairly well. In any case, their stock valuations have already reset on expectations of a downturn, so this may be a good time to begin accumulating.
The fact that these companies pay dividends — and have done so for many years — also helps buttress their prices. American companies are well known for maintaining their dividends even during rough economic times, even if that means the payout ratios increase. This is a unique advantage for U.S investors., as most foreign companies specifically tie their dividends to set payout ratios.
Let’s dive in and look at these high-tech dividend stocks.
| MSFT | Microsoft | $267.70 |
| RTX | Raytheon Technologies | $94.20 |
| AVT | Avnet | $42.68 |
| BELFB | Bel Fuse | $16 |
| AVGO | Broadcom | $509.09 |
| KT | KT Corporation | $14.39 |
Microsoft (MSFT)
Dividend Yield: 1%
Microsoft (NASDAQ:MSFT) stock is down over 20% YTD, but over the last year, it is flat before dividends. Its good yield, low price-earnings ratio, earnings growth, and large buybacks will equate to a higher price. It’s worth at least $337.39, or 26% more than the $267.70 it closed at on June 24.
For the year to June 30, 2023, analysts project a 15% higher EPS at $10.70 per share. This puts MSFT stock on a forward multiple of 25 times. However, this is significantly lower than its five-year average of 28x according to Morningstar.
This implies MSFT stock is worth $300 per share (28 x $10.70). Using a free cash flow (FCF) standpoint it could be worth much more. If we apply a 37% FCF margin to the June 2023 revenue forecast of $227 billion, its FCF estimate is $84 billion.
Using a 3% FCF yield metric, its market cap target is $2.8 trillion. That is 40% over its market cap today of $2.4 trillion. This implies a price target of $374.78.
This gives us two price targets: $300 (12% higher) based on P/E multiples, and $374.78 (based on FCF estimates). They average $338 ($337.39) per share between the two. This is 26% over today’s price. Moreover, given its 1% dividend yield, the total return is 27%.
That makes this one of the best high-tech dividend stocks to buy and hold.
Raytheon Technologies (RTX)
Dividend Yield: 2.3%
Raytheon Technologies (NYSE:RTX) is a defense and aerospace contractor that has good earnings growth, a higher dividend, and a lower P/E multiple than the S&P 500. As of June 24, RTX has a dividend yield of 2.3%, with its $2.20 annual dividend on its $94.20 per share.
Moreover, RTX stock has a forward P/E multiple of 19.7x for 2022. Earnings are forecast to move 21% higher from $4.77 in 2022 in 2023 to $5.77 per share. That lowers its P/E multiple falls to 16.3x.
Raytheon’s $4.77 EPS forecast for 2022 covers the $2.20 dividend payment. RTX’s target price is 28% higher at $116.86 per share. This makes RTX one of the best high-tech dividend stocks to buy and hold.
Avnet (AVT)
Dividend Yield: 2.4%
Avnet (NASDAQ:AVT) is up 3.8% YTD and up 7.2% in the past year to June 24. It is an electronics distributor that is forecast to show nominal growth.
AVT stock is attractive and has a 2.4% dividend yield. Its 2022 P/E is just 6.2x earnings for 2022 and 6.1x for 2023. It also has plenty of free cash flow (FCF) to cover the dividend.
For example, last quarter ending April 30, it produced $232.2 million in FCF. That covered its dividend payment of $25.6 million as well as share buybacks of $43.4 million.
This makes Avnet one of the best high-tech dividend income stocks to buy and hold now.
Bel Fuse (BELFB)
Dividend Yield: 1.8%
Electronic component maker Bel Fuse (NASDAQ:BELFB) is very cheap now, especially with its 1.8% dividend yield. The company’s revenue is projected to grow modestly at around 4.1% and earnings will grow 6.2% in 2023. For example, one analyst covering the stock projects that EPS will rise to from $2.27 in 2022 to $2.41 in 2023.
But at $16 on June 24, the stock trades for just 7x and 6.6x for 2022 and 2023 respectively. That is very cheap for a tech stock.
In addition, the company has paid a dividend every year for the past 23 years. This makes it one of the best high-tech dividend stocks to buy and hold for the long term.
Broadcom (AVGO)
Dividend Yield: 3.2%
Broadcom (NASDAQ:AVGO) is a semiconductor device and software company that has robust earnings growth and a cheap valuation. Its 3.2% dividend yield is very attractive and its P/E multiple, at 12.6x is very low.
Its fundamentals are good. Revenue is forecast to grow about 5.9% in 2023 to $34.85 billion for the year to October 2023. In addition, earnings are forecast to rise from $36.87 to $40.33, or 9.4% in October 2023, even higher than its revenue growth forecast.
Moreover, Broadcom has a massive buyback program worth about 6.6% of its stock market value. That will push the stock higher and makes it one of the best high-tech dividend stocks to buy and hold.
KT Corp (KT)
Dividend Yield: 5.2%
KT Corporation (NYSE:KT) is a South Korean telecom company. It also provides broadband services, as well as media and content services.
KT stock has an attractive 5.2% dividend yield assuming the dividend stays the same as last year. KT Corp pays one annual dividend each year. It recently declared its dividend on April 27 for around 75 cents. It does not go ex-dividend again until Dec. 30, 2022, when the next dividend is declared in May 2023.
It has a low 6.2x forward multiple. Moreover, earnings are forecast to grow modestly from $2.23 per share in 2022 to $2.30 in 2023. Its revenue is also projected to grow incrementally from $14.57 billion to $14.97 billion in 2023.
This makes KT Corp one of the higher yield high-tech dividend stocks to buy and hold for the next year.
On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.